How to Win the War on Terror

By Hernando de Soto : Peruvian economist
January 19,2016
Hernando de Soto
Peruvian economist

President of the Institute for Liberty and Democracy

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Photo: baronvsp / PIXTA

LIMA – It’s been 14 years since President George W. Bush declared a “global war on terror.” Today, after spending $1.6 trillion on that war and killing 101 terrorist chieftains, from Osama bin Laden to “Jihadi John,” the West remains just as vulnerable, if not more so, to extremists who can recruit fighters and strike any Western capital virtually at will.

Now that another president – François Hollande of France – has also declared war on terror (as have other European leaders), are the prospects for victory really any better? I have my doubts.

It is time to consider that the strength of our opponents derives, at least to some degree, from sentiments similar to those that animated the American Revolutionary War and the French Revolution: frustration with and alienation from the prevailing system.

In Britain’s American colonies before 1776, and throughout France in the years leading up to 1789, ordinary people became convinced that their lives, assets, and businesses had been subject for too long to the predations of arbitrary rulers. That same estrangement is felt nowadays in the Middle East and North Africa.

The right of the poor

After all, the Arab Spring began when a poor Tunisian entrepreneur, Mohamed Bouazizi, set himself on fire in December 2010 to protest the merciless expropriation of his business. He committed suicide – as his brother Salem told me in an interview recorded for American public television – for “the right of the poor to buy and sell.”

Within 60 days of Bouazizi’s death, his message galvanized the Arab world. Sixty-three more small entrepreneurs across the greater Middle East replicated his self-immolation, inciting hundreds of millions of Arabs to take to the streets and topple four governments. The force of their rage continues to destabilize the entire region.

The West didn’t grasp this message. As usual, it focused on macroeconomic adjustment and technical assistance, failing even to consider the property rights of the poor majority. This is an old problem: instead of remembering that property rights are what emancipated their societies from sovereign bullies, left-leaning Westerners think that protecting property is rightist dogma, conservatives take legal property rights for granted, and economists associate them with real-estate deals and carpentry.

The West’s failure to encourage Arab governments to establish, protect, and enhance their citizens’ property rights (and provide them with the means) created a vacuum, into which stepped the region’s romantic nationalists and their terrorist offshoots, which are now sending their foot soldiers to Europe.

Of course, these fanatics will not be able to boost living standards for the poor – far from it, as the predatory rule of the so-called Islamic State in its self-proclaimed caliphate proves. But in an atmosphere of deprivation and frustration, those who make false promises easily attract adherents.

How long will it take the West to remember that democratic capitalism requires strong property rights to set clear boundaries beyond which the state may not go? Like the entropic universe and all open spaces, the global market is a turbulent place with little respect for life.

All living systems, whether natural or organized by man, originate and operate only in encapsulated spaces. Whether we are talking about cells, molecules, body organs, computers, or social groups, each and every one is contained and constrained within a boundary: a membrane, an epidermis, a wall, or a legal right.

Within the boundaries of our bodies, complex multi-cellular structures are sustained by the production of molecules that ensure cooperation and the exchange of information among cells – a process known as “signaling.” Impairments in this process can lead to the onset of disorders such as cancer. If detached from other cells or the surrounding matrix, cells usually die within a short time, a process called “anoikis,” Greek for homelessness.

To end “anoikis”

Whoever ends “anoikis” in the greater Middle East will win the war on terror. That is why the West and its allies must help the 80% of the population whose survival depends on the boundaries needed to protect them and their assets (property rights and limited liability).

They need the signaling mechanisms to detect danger (records and tracking systems that come from recording assets and firms). They need the adhesion molecules to connect with others and build increasingly complex and valuable combinations (legally enforceable contracts). And they need the ability to use assets to guarantee credit and create capital (shares and stock to divide, extend, and collateralize property). Otherwise, the combined military forces of Europe and the United States – and now Russia – will win nothing.

If Hollande, the next US president, and their Arab allies are to stop terrorism, they must press (and help) Middle East governments to provide their people with the protections that will nurture their potential to prosper on equal terms in the global market. That is what the American and French revolutionaries did. And it is the surest way to deny extremists the attractiveness that sustains their existence.

(C)Project Syndicate